Tag: Personal Jurisdiction

The Second Circuit reversed a District Court that held it could not exercise personal jurisdiction over a Canadian defendant accused of accessing email servers located in Connecticut.

Defendant lived and worked in Canada for a U.S.-based company having its principal place of business in Connecticut. She knew her company’s email servers were located in Connecticut.

When she learned that she was about to be terminated from her position, she forwarded confidential company data from her work email account to her personal account.

The former employer sued in the U.S. District Court for the District of Connecticut. That court dismissed the case, holding that the relevant Connecticut state statute (Conn. Gen. Stat. § 52-59b(a)) did not authorize the exercise of personal jurisdiction. The lower court found that although the statute authorized personal jurisdiction over one who “uses a computer” in the state, defendant’s alleged computer use took place exclusively in Canada.

Plaintiff-employer sought review with the Second Circuit Court of Appeals. On appeal, the court reversed, holding that the state statute authorized the exercise of personal jurisdiction, and that such exercise comported with due process.

The court found it was “not material” that defendant was outside Connecticut when she accessed her employer’s servers. It held that the statute required only that the computer or network, not the user, be located in the state.

On the due process issue, the court found that defendant had minimum contacts with Connecticut, as she knew the servers were located there. The court also found that she purposefully directed her alleged tortious activity there. After balancing other relevant factors (e.g., location of witnesses, burden on the defendant, Connecticut’s interests in seeing its laws enforced), the court found the exercise of personal jurisdiction to be reasonable.

Last year Facebook made us wonder if it had gone off its meds when it filed a trademark infringement lawsuit against Illinois-based Teachbook.com. More than one commentator thought Facebook was being overzealous in its efforts to claim exclusivity in the term “book” for social networking services.

However one contenances the action, the court has shut the cover on the first chapter. The U.S. District Court for the Northern District of California (where Facebook is located) held that it lacked personal jursidction over the Illinois defendant. So it dismissed the case.

Applying the well-known “effects test” from Calder v. Jones, the court found that Teachbook had not expressly aimed its conduct into California:

Teachbook does not register users in California. Thus, even if Teachbook intended to compete with a California company, it intended to compete for users who were not in California. The fact that an essentially passive Internet advertisement may be accessible in the plaintiff’s home state without “something more” is not enough to support personal jurisdiction in a trademark infringement suit brought in the plaintiff’s home state.

So if the fight continues, it won’t take place in Facebook’s back yard.

uBid sued GoDaddy in federal court in Illinois, alleging cybersquatting. uBid claimed that GoDaddy — an Arizona-based company — intended to profit in bad faith by registering on behalf of its customers certain domain names that were similar to uBid’s trademarks. uBid alleged that GoDaddy would set up parked pages at those domains, displaying sponsored links to sites run by uBid’s competitors.

The district court dismissed the case, finding that the court lacked personal jurisdiction over GoDaddy. uBid sought review with the Seventh Circuit. On appeal, the court reversed, holding that the exercise of personal jurisdiction over GoDaddy would not violate due process.

Contact with the forum state

The court held that GoDaddy’s activities in Illinois were not continuous or systematic enough for the exercise of general jurisdiction. But applying the standards set forth in Keeton v. Hustler, the court found that GoDaddy’s efforts to exploit the Illinois marketplace were done so thoroughly, deliberately and successfully that it would not be unfair for GoDaddy to appear in court in Illinois.

After all, in part through its ads at Wrigley Field, the United Center and Joliet Speedway, not to mention the numerous Super Bowl ads seen in Illinois, GoDaddy had acquired hundreds of thousands of customers in the state.

Relatedness of claims

In finding that GoDaddy’s contacts with Illinois were sufficiently related to the claims in the case, the court similarly looked to the extent and nature of GoDaddy’s advertising and marketing. The court couched the relatedness in terms of a quid pro quo:

[O]ut-of-state residents may avail themselves of the benefits and protections of doing business in a forum state, but they do so in exchange for submitting to jurisdiction in that state for claims arising from or relating to those activities.

In this case, GoDaddy’s connection with Illinois and uBid’s claims made the relatedness quid pro quo “balanced and reasonable.” GoDaddy’s contacts with Illinois alleged in the complaint and the alleged wrongs committed were so “intimately related” that GoDaddy should not have been surprised to find itself sued in Illinois.

Fair play and substantial justice

Finally, the court examined the question of whether the exercise of personal jurisdiction would comport with traditional notions of fair play and substantial justice. Again, the court’s finding relied on the thoroughness with which GoDaddy had exploited the Illinois marketplace.

The State of Illinois filed a civil suit in federal court in Illinois against a New Mexico-based online cigarette seller. The trial court denied the defendant’s motion to dismiss for lack of personal jurisdiction. The defendant sought review with the Seventh Circuit. On appeal, the court affirmed the denial of the motion, holding that the defendant’s website satisfied the minimum contacts requirement for the exercise of personal jurisdiction.

The mechanics of the website were important in the minimum contacts analysis. The site expressly said that the company would sell to consumers in any state except those in New York. The court interpreted this to relate to the personal jurisdiction question in two ways. First, such a statement implicitly said that the defendant would do business in Illinois. Second, it revealed that the defendant knew that it could be subject to the jurisdiction of out-of-state courts (i.e., New York) and also knew how to prevent such an exercise (by not selling there).

In this analysis, the court expressly declined to adopt the well-known Zippo sliding scale test, which evaluates the interactivity of a website in the personal jurisdiction analysis.

Restating a hesitancy “to fashion a special jurisdictional test for Internet-based cases,” the court applied the traditional constitutional approach of the “effects test” found in Calder v. Jones. It made the interesting observation, as it did in Jennings v. AC Hydraulic A/S, that “although technological advances may alter the analysis of personal jurisdiction, those advances may not eviscerate the constitutional limits on a state’s power to exercise jurisdiction over nonresident defendants.”

Latest Domain Name News:

Evan Brown is an attorney in Chicago helping businesses and individuals identify and manage issues dealing with technology development, copyright, trademarks, domain names, software licensing, service agreements and other matters involving the internet and new media.

Evan is a partner in the law firm of Much Shelist, P.C. He is an adjunct professor of law at Chicago-Kent College of Law, and is a Domain Name Panelist with the World Intellectual Property Organization (WIPO).